PASADENA – Council members approved allocating $11.1 million in federal financing to restore the old Constance Hotel on Colorado Boulevard and Mentor Avenue.

Because the federal dollars must be allocated by the end of the year, the council was caught in the slightly awkward position of committing funds for a project that has yet to receive local environmental approval.

“It’s very odd,” said Councilman Terry Tornek, whose District 7 includes the project. “The whole process seems a little out of sequence.”

If the project cannot win environmental approval from the city, the federal financing will evaporate.

Arcadia-based developer Park Place Commercial will privately finance the cost of the construction, and the federal government will provide a tax waiver for the $11.1 million in financing, ensuring a lower interest rate than the company would have been able to otherwise get.

Park Place Commercial’s attorney, Richard McDonald, said the company anticipates completing the environmental work by September. It plans to break ground on the project by the end of this year.

The federal financing represents only a part of the cost of an estimated $76 million project to renovate Colorado between South Mentor and South Lake Avenue – the centerpiece of which is the renovation of the seven-story former Constance Hotel, built in 1926.

It would be restored and reopened as a 156-room boutique hotel.

Other components of the project include replacing an existing single-story building at Lake and Colorado with a seven-story commercial and office building.

Officials estimate the project will create about 1,380 new jobs, including 630 construction jobs.

Park Place will use private financing for that phase of the project.

But without the assistance of the federal government, the hotel might not get restored and the rest of the project might not go through, McDonald said.

That fact is not lost on Dave Horton, who owns Copy Right, a copy business on Colorado. He said he wouldn’t be bothered by having to move, if it weren’t for the fact that federal money – his tax dollars – are being used to fund part of the project.

“My feeling is simple: If you are using federal dollars, you are using my dollars to displace me,” Horton said.

Tornek said he believes there is wide community support for the restoration of the old Constance Hotel. He’s not so certain about the rest of the project, he said.

“Whatever issues there might be will surround the office and retail component of the project,” Tornek said.